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Higher education: Report: Tennessee 34th when it comes to college affordability

NASHVILLE — Tennessee ranks 34th among the states in college affordability, in part due to the state's relatively low provision of need-based financial aid and its high number of low-income families, according to a study released Wednesday by Vanderbilt University and the University of Pennsylvania.

The newest College Affordability Diagnosis means college is more affordable for most families in 33 states than in Tennessee. The state-by-state comparison analyzes college costs in relation to family income levels and was conducted by Vanderbilt, Penn and the Higher Education Policy Institute. Overall, it indicates that higher education has gone from expensive to unaffordable for many low- and middle-income families.

The study, however, is based on national data for the fall semester of 2013 — the most recent year in which all the data used in the analysis is available — and does not take into account the two years of free community college provided by the Tennessee Promise program. The first class of Tennessee Promise students entered college last fall.

When the program's numbers show up in the analysis, Tennessee will likely move up in the affordability ranking but it's too early to predict how much, said William Doyle, colead investigator in the study and associate professor of public policy and higher education at Vanderbilt.

'I do think it's quite likely that Tennessee's national ranking will improve, and that will happen because you have students attending relatively affordable institutions and those students are paying lower net prices than they did in the past,' he said.

If Tennessee is to realize the goals of Gov. Bill Haslam's Drive to 55 campaign — to increase the percentage of adult Tennesseans with a college degree or post-high school certificate from the current 32 percent to 55 percent by 2025 — affordable college options must remain an important part of the policy agenda, Doyle said.

'One of the things that we know really does help with affordability and would make a difference in the overall ranking is the investment in need-based financial aid. Tennessee does have a strong investment in the lottery scholarships but we do really recommend spending additional money if it becomes available on need-based financial aid.' The lottery-funded Hope Scholarships are largely based on academic performance and there is no income ceiling to qualify.

According to the study, the highest proportion of Tennessee enrollment — 29 percent — is in public research institutions like the University of Tennessee and the University of Memphis. On average, 28 percent of family income is required to cover the cost of attending those institutions full time.

About 28 percent of Tennessee undergraduates attend the more affordable public two-year colleges, but even there families earning $30,000 or less per year would have to spend 37 percent of family income, the study says. That will change as more Tennessee Promise recipients enroll.

'The way we look at it is, what are the net prices that people have to pay, by income, and then how many people of different income levels live in that state. So if you charge lower prices and people are going to more affordable institutions — and depending on the amount that people can afford to pay based on their income — those are the factors that lead to a higher ranking,' Doyle said.

'So in a state like Tennessee, state leaders have to be very aware of the challenges for many families in paying for higher education since there are a relatively higher number of low-income families in the state.'

The state Legislature, which ended its 2016 session last week, considered but did not pass a bill freezing public college tuition and fees for two years. It would have also entering freshmen to pay the same tuition and fee rates for four years.

But sponsors of the bill focused on the rise of administrative costs and salaries as the primary cause of tuition increases. Their analysis downplayed the reversal of the state's old funding ratio in which 70 percent of an undergraduate's costs were paid by state appropriations and 30 percent or less by tuition; it's now about 70 percent tuition/30 percent state funding.

The study says tuition freezes are 'well intentioned but do not address the underlying cost structures' and while they protect current students, are normally followed by steep increases. 'These freezes have often contributed to the boom-bust cycles of tuition in which some students get relief, usually in times of relative prosperity, and those who come after them pay a premium,' it says.

The Tennessee Higher Education Commission says the state has increased need-based financial aid from $87.6 million in school year 2013-14 to $110.8 million in the current year. Those numbers include the Tennessee Student Assistance Award and the need-based component of lottery scholarships.

'We do want to emphasize that Tennessee Promise and other Drive to 55 efforts will continue to change how Tennessee compares on college affordability,' said THEC spokeswoman Kate Derrick. 'The timing of the study means that it does not account for recent increases in funding and new initiatives that have come into place since Fall 2013.

'This report focuses on college affordability, family income, the state's economy and how they are related. We agree that Tennessee has room for improvement in each of these areas. As a result, we plan to continue to prioritize college access and affordability in our state. Through Drive to 55 initiatives—such as Tennessee Promise—we are focusing on lessening the gap between the cost of college and income in our state.'

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